UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required]
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required] For the transition period
from______________to___________________
Commission File Number: 0-021297
Foundation Bancorp, Inc.
----------------------------------------------
(Name of small business issuer in its charter)
Ohio 31-1465239
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
25 Garfield Place, Cincinnati, Ohio 45202
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (513) 721-0120
Securities registered pursuant to Section 12(b) of the Act:
None
------
Securities registered pursuant to Section 12(g) of the Act:
None Common Stock, no par value per share
- ------------------------------------------- ------------------------------------
(Name of each exchange on which registered) (Title of Class)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the issuer was required to file such reports), and
(2) has been subject to such requirements for the past 90 days. Yes No X
Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant, computed by reference to the average of the bid and asked
prices of such stock on the National Daily Quotation Service as of October 18,
1996, was $3,959,277. (The exclusion from such amount of the market value of
the shares owned by any person shall not be deemed an admission by the
registrant that such person is an affiliate of the registrant.)
As of October 18, 1996, there were 462,875 shares of the Registrant's
common stock issued and outstanding.
Pursuant to Rule 15d-2 of the Securities Exchange Act of 1934, this Form
10-KSB contains only the Registrant's financial statements for the fiscal year
ended June 30, 1996.
<PAGE>
Independent Auditors' Report
The Board of Directors
Foundation Savings Bank:
We have audited the statements of financial condition of Foundation
Savings Bank as of June 30, 1996 and 1995, and the related statements of
income, retained earnings, and cash flows for each of the three years in the
period ended June 30, 1996. These financial statements are the responsibility
of the Corporation's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Foundation Savings
Bank as of June 30, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended June 30, 1996 in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Corporation
adopted the provisions of Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" at July 1, 1993 and Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" at July 1, 1994.
CLARK, SCHAEFER, HACKETT & CO.
Cincinnati, Ohio
August 1, 1996
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<PAGE>
FOUNDATION SAVINGS BANK
Statements of Financial Condition
June 30, 1996 and 1995
Assets
----------
June 30,
--------------------
1996 1995
------ ------
Cash $ 61,081 $ 57,374
Interest-bearing deposits in other
financial institutions 1,111,408 3,885,606
----------- -----------
1,172,489 3,942,980
Investment securities - at amortized cost
(fair value of $900,635 and $1,034,812 at
June 30, 1996 and 1995 respectively) 899,687 1,050,000
Mortgage-backed securities - at amortized
cost (fair value of $4,553,889 and $5,409,400
at June 30, 1996 and 1995, respectively) 4,640,509 5,532,399
Loans receivable, net 23,266,664 20,510,541
Accrued interest receivable:
Loans 99,150 79,335
Investments and interest bearing deposits 14,198 16,389
Mortgage-backed securities 36,817 41,522
Federal Home Loan Bank stock - at cost 278,800 260,400
Property and equipment, net 313,281 323,773
Refundable federal income tax 2,522 31,927
Prepaid expenses and other assets 111,038 60,050
----------- -----------
$30,835,155 $31,849,316
=========== ===========
Liabilities and Retained Earnings
-----------------------------------
Deposits $26,950,784 $27,737,204
Advances from Federal Home Loan Bank 824,847 1,191,577
Advances by borrowers for taxes,
insurance and other 70,179 39,076
Accrued expenses 135,985 114,747
Deferred federal income tax 60,800 60,600
----------- -----------
28,042,595 29,143,204
Retained earnings, substantially restricted 2,792,560 2,706,112
----------- -----------
$30,835,155 $31,849,316
=========== ===========
See accompanying notes to financial statements.
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<PAGE>
FOUNDATION SAVINGS BANK
Statements of Income
Three Years Ended June 30, 1996
June 30,
----------------------------------------
1996 1995 1994
------ ------ ------
Interest income:
Loans $1,807,332 $1,655,223 $1,594,174
Mortgage-backed securities 303,835 320,376 286,084
Investment securities 69,453 69,104 27,620
Interest-bearing deposits 178,338 117,309 160,799
---------- ---------- ----------
Total interest income 2,358,958 2,162,012 2,068,677
---------- ---------- ----------
Interest expense:
Deposits 1,540,535 1,308,686 1,297,024
Borrowings 51,017 59,265 41,966
---------- ---------- ----------
Total interest expense 1,591,552 1,367,951 1,338,990
---------- ---------- ----------
Net interest income 767,406 794,061 729,687
Provision for loan losses 43,990 12,000 32,600
---------- ---------- ----------
Net interest income after
provision for loan losses 723,416 782,061 697,087
---------- ---------- ----------
Other income:
Gain on sale of investment securities -- -- 132,431
Gain on sale of loans 7,889 12,179 --
Net investment property income 49,495 50,446 64,926
Gain on sale of equipment -- -- 1,164
Other operating income 7,066 7,051 5,395
---------- ---------- ----------
Total other income 64,450 69,676 203,916
---------- ---------- ----------
General, administrative and other expense:
Employee compensation and benefits 362,233 364,607 292,230
Occupancy and equipment 78,565 76,604 77,488
Deposit insurance 62,353 61,911 65,527
Franchise tax 34,173 31,916 31,372
Computer processing costs 32,347 32,268 29,387
Other operating expense 104,905 111,267 131,386
---------- ---------- ----------
Total general, administrative
and other operating expense 674,576 678,573 627,390
---------- ---------- ----------
Income before income taxes 113,290 173,164 273,613
---------- ---------- ----------
Federal income taxes (credits):
Current 26,642 30,000 62,263
Deferred 200 17,800 16,100
---------- ---------- ----------
26,842 47,800 78,363
---------- ---------- ----------
Net income $ 86,448 $ 125,364 $ 195,250
========== ========== ==========
See accompanying notes to financial statements.
-4-
<PAGE>
FOUNDATION SAVINGS BANK
Statements of Retained Earnings
Three Years Ended June 30, 1996
Balance at June 30, 1993 $2,385,498
Net income for the year ended
June 30, 1994 195,250
----------
Balance at June 30, 1994 2,580,748
Net income for the year ended
June 30, 1995 125,364
----------
Balance at June 30, 1995 2,706,112
Net income for the year ended
June 30, 1996 86,448
----------
Balance at June 30, 1996 $2,792,560
==========
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
FOUNDATION SAVINGS BANK
Statements of Cash Flows
Three Years Ended June 30, 1996
Years Ended June 30,
-------------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Cash flows from operating activities:
Interest received $ 2,335,168 $ 2,145,841 $ 2,065,169
Interest paid (1,589,414) (1,365,659) (1,339,074)
Cash paid to suppliers and employees (677,971) (679,261) (648,076)
Fees and commissions received 7,066 7,051 6,332
Income taxes (paid) refunded 2,763 (39,527) (67,463)
Rental income received 68,400 68,400 83,000
----------- ----------- -----------
Net cash provided by
operating activities 146,012 136,845 99,888
----------- ----------- -----------
Cash flows from investing activities:
Purchase of mortgage-backed securities (82,714) -- (3,143,631)
Repayments of mortgage-backed securities 944,043 1,029,624 1,798,427
Maturities of certificates of deposit -- 1,400,000 --
Purchase of investment securities (499,687) -- (1,050,000)
Proceeds from sale of investment -- -- 143,272
securities
Maturities of investment securities 650,000 -- --
Loan disbursements (8,014,053) (5,637,576) (2,961,358)
Loan principal repayments 4,543,414 3,354,330 3,700,533
Proceeds from sale of loans 701,447 576,584 --
Purchase of property and equipment (5,803) (4,249) (5,526)
----------- ----------- -----------
Net cash provided by (used
in) investing activities (1,763,353) 718,713 (1,518,283)
----------- ----------- -----------
Cash flows from financing activities:
Net increase (decrease) in deposits (786,420) 389,042 (1,713,715)
Proceeds from Federal Home Loan Bank
advances -- 300,000 1,000,000
Repayment of Federal Home Loan Bank
advances (366,730) (63,211) (45,212)
----------- ----------- -----------
Net cash provided by (used
in) financing activities (1,153,150) 625,831 (758,927)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents (2,770,491) 1,481,389 (2,177,322)
Cash and cash equivalents at beginning
of period 3,942,980 2,461,591 4,638,913
----------- ----------- -----------
Cash and cash equivalents
at end of period $ 1,172,489 $ 3,942,980 $ 2,461,591
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE>
<TABLE>
FOUNDATION SAVINGS BANK
Statements of Cash Flows
Three Years Ended June 30, 1996
Reconciliation of Net Income to Net Cash
Provided By Operating Activities
----------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Net income $ 86,448 $ 125,364 $ 195,250
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of loans (7,889) (12,179) --
Gain on sale of investment securities -- -- (132,431)
Depreciation and amortization 16,295 15,778 16,497
Amortization of premiums and discounts
on mortgage-backed securities 30,561 30,721 55,881
Federal Home Loan Bank stock dividends (18,400) (22,600) (11,300)
Provision for loan losses 43,990 12,000 32,600
Amortization of deferred loan fees (23,032) (9,567) (17,118)
Increase in deferred loan fees -- -- 937
Deferred federal income tax 200 17,800 16,100
Effects of change in operating assets
and liabilities:
Accrued interest receivable (12,919) (14,725) (30,971)
Federal income taxes 29,405 (9,527) (5,200)
Prepaid expenses and other assets (50,988) (20,380) 1,067
Advances by borrowers for taxes,
insurance and other 31,103 17,462 (10,783)
Accrued expenses 21,238 6,698 (10,641)
--------- --------- ---------
Net cash provided by operating
activities $ 146,012 $ 136,845 $ 99,888
========= ========= =========
</TABLE>
Supplemental disclosure of non-cash investing activities:
The Corporation compensated the widow of the former managing officer with a
car with a net book value of $10,135 in 1994.
See accompanying notes to financial statements.
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<PAGE>
FOUNDATION SAVINGS BANK
Notes to Financial Statements
Three Years Ended June 30, 1996, 1995 and 1994
1. Organization and Summary of Significant Accounting Policies:
The following describes the organization and the significant accounting
policies followed in the preparation of these financial statements.
Organization
The Corporation is a state chartered savings and loan association
and a member of the Federal Home Loan Bank System and subject to
regulation by the Office of Thrift Supervision (OTS), an office of
the U. S. Department of the Treasury. As a member of this system,
the Corporation maintains a required investment in capital stock of
the Federal Home Loan Bank of Cincinnati. The Corporation provides
loans to customers and receives deposits from customers primarily in
the metropolitan Cincinnati area.
Savings accounts are insured by the Savings Association Insurance
Fund (SAIF), administered by the Federal Deposit Insurance
Corporation (FDIC), within certain limitations. An annual premium is
required by the SAIF for the insurance of such savings accounts.
Cash and cash equivalents
For the purpose of reporting cash flows, the Corporation considers
all highly liquid debt instruments with original maturity when
purchased of three months or less to be cash equivalents.
Investment and mortgage-backed securities
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." This standard
addresses the accounting and reporting for securities based on
management's intent and ability to hold such securities to maturity.
The Corporation adopted this standard on July 1, 1994. Statement No.
115 requires the classification of investments in debt and equity
securities into three categories; held to maturity, trading, and
available for sale. Debt securities that the Corporation has the
positive intent and ability to hold to maturity are classified as
held to maturity securities and reported at amortized cost. Debt and
equity securities that are bought and held principally for the
purpose of selling in the near term are classified as trading
securities and reported at fair value, with unrealized gains and
losses included in earnings. The Corporation has no trading
securities. Debt and equity securities not classified as either held
to maturity securities or trading securities are classified as
available for sale securities and reported at fair value, with
unrealized gains or losses excluded from earnings and reported as a
separate component of stockholders' equity, net of deferred taxes.
At the date of implementation of Statement No. 115, the Corporation
had not identified any investment or mortgage-backed securities as
available for sale.
-8-
<PAGE>
Premiums and discounts on investment securities and mortgage-backed
securities are amortized and accreted using the interest method over
the expected lives of the related securities.
The Corporation presently classifies all investment securities as
held to maturity, and carries such investment securities at
amortized cost.
Loans receivable
Loans held in portfolio are stated at the principal amount
outstanding, adjusted for deferred loan origination fees and costs,
the allowance for loan losses, and premiums and discounts on loans
purchased. Premiums and discounts on loans purchased are amortized
and accreted to operations using the interest method over the
estimated life of the underlying loans.
Loan origination fees and certain direct origination costs are
capitalized and recognized as an adjustment of the yield on the
related loan over the contractual life of the loan.
Interest is accrued as earned unless the collectibility of the loan
is in doubt. Uncollectible interest on loans that are contractually
past due is charged off, or an allowance is established based on
management's periodic evaluation. The allowance is established by a
charge to interest income equal to all interest previously accrued,
and income is subsequently recognized only to the extent that cash
payments are received until, in management's judgment, the
borrower's ability to make periodic interest and principal payments
has returned to normal, in which case the loan is returned to
accrual status.
Loans held for sale are carried at the lower of cost or market,
determined in the aggregate. In computing cost, deferred loan
origination fees and costs are aggregated with the principal
balances of the related loans. At June 30, 1996 and 1995, the
Corporation had not identified any loans held for sale.
The Corporation will either sell the related servicing on loans or
retain the servicing on loans sold and agree to remit to the
investor loan principal and interest at agreed-upon rates. For loans
where servicing is retained by the Savings Bank, these rates can
differ from the loan's contractual interest rate resulting in a
"yield differential." In addition to previously deferred loan
origination fees and cash gains, gains on sale of loans can
represent the present value of the future yield differential less a
normal servicing fee, capitalized over the estimated life of the
loans sold. Normal servicing fees are determined by reference to the
stipulated minimum servicing fee set forth by the government
agencies to whom the loans are sold. Such servicing fees are
representative of the Corporation's normal servicing costs.
The resulting capitalized excess servicing fee is amortized to
operations over the life of the loans using the interest method. If
prepayments are higher than expected, an immediate charge to
operations is made. If prepayments are lower, then the related
adjustments are made prospectively.
-9-
<PAGE>
It is the Corporation's policy to provide valuation allowances for
estimated losses on loans based on past loss experience, trends in
the level of delinquent and problem loans, adverse situations that
may affect the borrower's ability to repay, the estimated value of
any underlying collateral and current and anticipated economic
conditions in the primary lending area. When the collection of a
loan becomes doubtful, or otherwise troubled, the Corporation
records a loan loss provision equal to the difference between the
fair value of the property securing the loan and the loan's carrying
value. Major loans and major lending areas are reviewed periodically
to determine potential problems at an early date. The allowance for
loan losses is increased by charges to earnings and decreased by
charge-offs (net of recoveries). The amount of actual write-offs
could differ from the estimate. Because of uncertainties inherent in
the estimation process, management's estimate of credit losses
inherent in the loan portfolio and the related allowance may change
in the near term. However, the amount of the change that is
reasonably possible cannot be estimated.
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan." This standard amends Statement
No. 5 to clarify that a creditor should evaluate the collectibility
of both contractual interest and contractual principal on all loans
when assessing the need for a loss accrual. In October, 1994, the
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosure," which
amends Statement No. 114 to allow a creditor to use existing methods
for recognizing interest income on impaired loans. The statements
were effective for the fiscal year beginning July 1, 1995. The
Corporation adopted the statement effective July 1, 1995, without
material effect on financial condition or results of operations.
For impairment recognized in accordance with SFAS No. 114, as
amended, the entire change in present value of expected cash flows
is reported as bad debt expense in the same manner in which
impairment initially was recognized or as a reduction in the amount
of bad debt expense that otherwise would be reported. Interest on
impaired loans is reported on the cash basis. Impaired loans are
loans that are considered to be permanently impaired in relation to
principal or interest based on the original contract. Impaired loans
would be charged off in the same manner as all loans subject to
charge off. The Corporation considers its investment in one- to
four-family and multi-family residential loans, non-residential
loans and consumer loans to be homogeneous and therefore excluded
from separate identification for evaluation of impairment. The
Corporation's policy is that collateral dependent loans, which are
more than ninety days delinquent, are considered to constitute more
than a minimum delay in repayment and are evaluated for impairment
under SFAS No. 114 at that time. For the year ended June 30, 1996,
the Corporation had no loans that were impaired as described in the
pronouncement and therefore no interest income was recognized or
received on impaired loans.
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<PAGE>
Real estate acquired through foreclosure
Real estate acquired through foreclosure results when property
collateralizing a loan is foreclosed upon or otherwise acquired by
the Corporation in satisfaction of the loan. Real estate acquired in
settlement of loans is recorded at the lower of the recorded
investment in the loan satisfied or the fair value of the assets
received at the time of acquisition less estimated costs to sell at
the date of foreclosure. The fair value of the assets received is
based upon a current appraisal adjusted for estimated carrying and
selling costs. Valuations are periodically performed by management,
and an allowance for losses is established by a charge to operations
if the carrying value of a property exceeds its estimated net
realizable value.
Property and equipment
Property and equipment is stated at cost. Depreciation of property
and equipment is provided by the straight-line method over the
estimated useful lives (range of lives five to fifteen years) of the
related classes of assets.
Income taxes
Effective July 1, 1993, the Corporation adopted Financial Accounting
Standards Board Statement No. 109 (FAS 109), "Accounting for Income
Taxes." The adoption of FAS 109 changed the method of accounting for
income taxes from the deferred method to an asset and liability
approach which requires the recognition of deferred tax liabilities
and assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis of assets
and liabilities. The impact of adopting this standard had no
material effect on the financial statements.
Under FAS 109, deferred income tax assets and liabilities are
computed annually for differences between the financial statement
and tax basis of assets and liabilities that will result in taxable
or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are
expected to affect taxable income. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is
more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the
date of enactment. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period
in deferred tax assets and liabilities.
Accounting estimates
The presentation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
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<PAGE>
Concentrations of credit risk
The Corporation grants first mortgage and other loans to customers
located primarily in the metropolitan Cincinnati area. Accordingly,
a substantial portion of its debtors' ability to honor their
contracts is dependent upon the financial health of the local
economy and market.
Management may, at times, maintain deposit accounts with financial
institutions in excess of federal deposit insurance limits.
Recent accounting pronouncements
Financial Accounting Standards Board Statement No. 107, "Disclosures
About Fair Value of Financial Statements," requires disclosure of
fair value information about financial instruments, whether or not
recognized in the statement of condition, for which it is practical
to estimate that value. Statement No. 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure
requirements. The Corporation adopted Statement No. 107 for the year
ending June 30, 1996.
In October, 1994, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 119, "Disclosures
about Derivative Financial Instruments and Fair Value of Financial
Instruments." This statement requires disclosures about the amounts,
nature and terms of derivative financial instruments that are not
subject to Statement No. 105, "Disclosures of Information about
Financial Instruments and Off-Balance-Sheet Risk and Financial
Instruments with Concentrations of Credit Risk," because they do not
result in off-balance-sheet risk of accounting loss.
It requires that a distinction be made between financial instruments
held or issued for trading purposes (including dealing and other
trading activities measured at fair value with gains and losses
recognized in earnings) and financial instruments held or issued for
purposes other than trading. Statement No. 119 is effective for
financial statements issued for fiscal years ending after December
15, 1995. The adoption of this standard has not had a significant
impact on the Corporation.
In May 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 122, "Accounting for
Mortgage Servicing Rights." This statement requires that a mortgage
banking enterprise recognize as separate assets rights to service
mortgage loans for others however those servicing rights are
acquired. A mortgage banking enterprise that acquires mortgage
servicing rights through either the purchase or origination of
mortgage loans and sells or securitizes those loans with servicing
rights retained would allocate the total cost of the mortgage loans
to the mortgage servicing rights and the loans based on their
relative fair value. Statement No. 122 is effective for fiscal years
beginning after December 31, 1995. Management has determined that
the impact of this pronouncement is presently immaterial.
In June 1996 the FASB issued SFAS No. 125 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of
Liabilities" which established accounting and reporting standards
for transfers and servicing of financial assets and extinguishments
of liabilities. The standards are based on a consistent application
of a financial components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity
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<PAGE>
recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when
control has been surrendered, and derecognizes liabilities when
extinguished. SFAS No. 125 provides consistent standards for
distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. This statement supersedes
SFAS No. 122. SFAS No. 125 is effective for transactions occurring
after December 31, 1996. Management does not expect an impact from
adoption of SFAS No. 125.
2. Investment Securities:
The amortized cost, gross unrealized gains, gross unrealized losses
and fair values of investment securities are as follows:
<TABLE>
June 30, 1996
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Obligations of U.S.
Government agencies $899,687 $ 948 - $900,635
======== ======== ======== ========
June 30, 1995
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----
Obligations of U.S.
Government agencies $1,050,000 $ - $15,189 $1,034,812
========== ============= ======= ==========
</TABLE>
The amortized cost and fair value of investment securities at June
30, 1996 and 1995 by contractual maturity are shown below. Actual
maturities may differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without
call or prepayment penalties.
June 30, 1996
---------------------------
Amortized Fair
Cost Value
--------- -------
Due or callable in one year
or less $ 899,687 $ 900,635
Due after one year through
five years - -
----------- ----------
$ 899,687 $ 900,635
=========== ==========
June 30, 1995
---------------------------
Amortized Fair
Cost Value
--------- -------
Due or callable in one year
or less $ 900,000 890,624
Due after one year through
five years 150,000 144,188
------------ ------------
$1,050,000 $1,034,812
============ ============
Included in investments at June 30, 1996, are $500,000 of callable
notes with a final maturity in the year 2001.
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<PAGE>
3. Mortgage-Backed Securities:
The amortized cost, gross unrealized gains, gross unrealized losses and
fair value of mortgage-backed securities are as follows:
June 30, 1996
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- --------
Federal Home Loan
Mortgage Corp. $2,117,050 -- $ 33,746 $2,083,304
Federal National
Mortgage Association 2,308,198 -- 52,063 2,256,135
Government National
Mortgage Association 215,261 -- 811 214,450
---------- ------- ---------- ----------
$4,640,509 -- $ 86,620 $4,553,889
========== ======= ========== ==========
June 30, 1995
-------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- --------
Federal Home Loan
Mortgage Corp. $2,641,753 -- $ 59,504 $2,582,249
Federal National
Mortgage Association 2,658,239 -- 59,770 2,598,469
Government National
Mortgage Association 232,407 -- 3,725 228,682
---------- -------- ---------- ----------
$5,532,399 -- $ 122,999 $5,409,400
========== ======== ========== ==========
The maturity of the mortgage-backed securities is based on the repayment
of the underlying mortgages.
4. Loans Receivable:
Loans receivable consists of the following:
June 30
----------------------------------
1996 1995
-------------- --------------
Residential one- to four-
family real estate $ 20,949,519 $ 18,299,896
Multi-family residential
real estate 903,137 636,068
Commercial real estate 1,286,992 1,124,131
Consumer 296,332 500,643
Passbook 56,331 111,282
------------ ------------
23,492,311 20,672,020
Less:
Loans in process (89,191) (15,000)
Allowance for loan losses (111,147) (98,138)
Deferred loan fees (25,309) (48,341)
------------ ------------
$ 23,266,664 $ 20,510,541
============ ============
At June 30, 1996 and 1995, adjustable rate loans approximated $9,240,000
and $10,862,000.
-14-
<PAGE>
Activity in the allowance for loan losses are as follows:
Year Ended June 30,
---------------------------------------
1996 1995 1994
---------- ---------- ----------
Beginning balance $ 98,138 $72,107 $ 100,725
Provision for loan losses 43,990 12,000 32,600
Net (charge-offs) recoveries (30,981) 14,031 (61,218)
--------- ------- ---------
Ending balance $ 111,147 $98,138 $ 72,107
========= ======= =========
Gross proceeds on sales of loans were $701,447 and $576,584 for the years
ended June 30, 1996 and 1995, respectively. Gross realized gains on sales
of loans were $7,889, $2,702 and $12,179 for the years ended June 30,
1996, 1995 and 1994. Loans serviced for others as of June 30, 1996, 1995
and 1994 were $251,280, $198,076 and $-0-, respectively.
At June 30, 1996 and 1995, the Corporation had no non-accrual loans.
Loans to officers, directors and employees totalled approximately $93,521
and $98,866 at June 30, 1996 and 1995, respectively. An analysis of loan
activity to such persons for the fiscal year ended June 30, 1996 and 1995
is as follows:
Year Ended June 30,
-------------------------
1996 1995
-------- --------
Outstanding balance, beginning $98,866 $104,031
New loans issued - -
Repayments 5,345 5,165
------- -------
Outstanding balance, ending $93,521 $ 98,866
======= =========
5. Property and Equipment:
Property and equipment are summarized as follows:
1996 1995
------ ------
Real estate owned - investment
property $251,847 $251,847
Furniture and equipment 153,264 154,913
Leasehold improvements 34,246 34,246
-------- --------
439,357 441,006
Less accumulated depreciation 126,076 117,233
-------- --------
$313,281 $323,773
======== ========
The Savings Bank leases its office facility under a ten year
non-cancelable lease which expires in March of 2001 with additional
renewal options. Rent expense for each of the years ended June 30, 1996,
1995 and 1994 was $53,355.
Minimum commitments under the term of the lease are as follows:
Year Ended June 30,
-------------------
1997 $ 51,628
1998 51,628
1999 51,628
2000 51,628
Subsequent years 38,722
--------
$245,234
========
-15-
<PAGE>
6. Investment Property:
The Corporation acquired real estate at the southeast corner of Eighth
and Vine Streets in 1980. The Corporation has a lease agreement on the
property as a parking lot under a three year lease beginning July 1,
1994. The lease payments will be $5,700 per month for the first two years
and $6,100 per month for the third year. Rent income for the years ended
June 30, 1996, 1995 and 1994 was $68,400, $68,400 and $83,000,
respectively.
7. Deposits:
<TABLE>
Deposits consist of the following:
June 30,
-------------------------------------------------
1996 1995
--------------------- ----------------------
Weighted Weighted
Average Average
Rate Amount Rate Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Passbook 2.50% $ 995,905 2.87 $ 1,287,943
NOW and money market accounts 2.49 1,947,215 2.66 2,507,150
--------- ---------
2.50 2,943,120 2.77 3,795,093
--------- ---------
Certificates of deposit:
3 months 4.42 291,311 4.42 203,356
6 months 4.33 1,416,086 5.79 1,192,710
10/11 months 2.81 22,961 6.31 4,900,236
12 months 5.62 9,976,064 5.71 4,454,225
18 months 6.42 5,538,925 6.19 8,514,317
2 years 6.12 4,735,688 5.62 3,065,798
3 years 5.94 829,830 5.53 556,922
4 years 5.38 209,055 5.24 127,306
5 years 5.76 987,744 6.56 927,241
---------- -------
5.82 24,007,664 6.01 23,942,111
---------- ----------
5.46% $26,950,784 5.57 $27,737,204
=========== ===========
</TABLE>
Maturities of outstanding certificates of deposit are summarized as
follows:
June 30,
-------------------------
1996 1995
------ ------
(In Thousands)
One year or less $19,151 $15,647
1 - 2 years 3,476 7,445
2 - 3 years 859 549
Over 3 years $ 522 $ 301
------- -------
$24,008 $23,942
======= =======
Interest expense on deposits is summarized as follows:
<TABLE>
June 30,
-------------------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Passbook $ 33,469 $ 45,278 $ 66,769
NOW and money market accounts 54,233 79,124 98,787
Certificates of deposit 1,452,833 1,184,284 1,131,468
--------- --------- ---------
$1,540,535 $1,308,686 $1,297,024
========== ========== ==========
</TABLE>
-16-
<PAGE>
The aggregate amount of certificates of deposits in denominations of
$100,000 or more was $2,639,352 and $3,088,352 at June 30, 1996 and 1995,
respectively. Deposit accounts exceeding $100,000 are not federally
insured.
8. Advances from Federal Home Loan Bank:
The Corporation borrowed $1,000,000 in 1994 from the Federal Home Loan
Bank under a mortgage matched advance program. Interest is charged on the
advance at a weighted average rate of 5.50% and is due in 120 to 180
monthly installments of $9,517 including interest. The Savings Bank
borrowed an additional $300,000 in 1995. The note is an interest only
note, bearing an interest rate of 6.85%. The note matured September 1,
1995.
Future maturities on the advance are as follows:
Year Ended June 30,
-------------------
1997 $ 70,445
1998 74,366
1999 78,506
2000 82,878
2001 87,494
2002 and subsequent $431,158
--------
$824,847
========
The advances are collateralized by a blanket agreement on residential
mortgage loans held by the Savings Bank. The Savings Bank has also
pledged its Federal Home Loan Bank stock and mortgage notes with unpaid
principal balances of approximately $1,245,000 for future advances.
9. Financial Instruments:
The following fair value disclosures are made in accordance with the
requirements of SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments." SFAS No. 107 requires the disclosure of fair value
information about both on- and off-balance sheet financial instruments
where it is practical to estimate that value. In cases where quoted
market prices were not available, fair values were based on estimates
using present value or other valuation methods, as described below. The
use of different assumptions (e.g., discount rates and cash flow
estimates) and estimation methods could have a significant effect on fair
value amounts. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Corporation could realize in a
current market exchange. Because SFAS No. 107 excludes certain financial
instruments and all non-financial instruments from its disclosure
requirements, any aggregation of the fair value amounts presented would
not represent the underlying value of the Corporation.
The following methods and assumptions were used in estimating the fair
values of financial instruments, cash, interest bearing deposits and
investment in FHLB stock. The carrying value of cash and interest bearing
deposits approximates those assets' fair value.
Investments and mortgage-backed securities
For investment securities (debt instruments) and mortgage-backed
securities, fair values are based on quoted market prices, where
available. If a quoted market price is not available, fair value is
estimated using quoted market prices of comparable instruments.
Loans receivable
The fair value of the loan portfolio is estimated by evaluating
homogeneous categories of loans with similar financial
characteristics. Loans are segregated by types, such as residential
-17-
<PAGE>
mortgage, commercial real estate and consumer. Each loan category is
further segmented into fixed and adjustable rate interest, terms,
and by performing and nonperforming categories.
The fair value of performing loans, except residential mortgage
loans, is calculated by discounting contractual cash flows using
estimated market discount rates which reflect the credit and
interest rate risk inherent in the loan. For performing residential
mortgage loans, fair value is estimated by discounting contractual
cash flows adjusted for prepayment estimates using discount rates
based on secondary market sources. The fair value for significant
nonperforming loans is based on recent internal or external
appraisals. Assumptions regarding credit risk, cash flow, and
discount rates are judgmentally determined by using available market
information.
Savings accounts
The fair values of passbook accounts, NOW accounts, and money market
savings and demand deposits approximates their carrying values. The
fair value of fixed maturity certificates of deposit is estimated
using a discounted cash flow calculation that applies interest rates
currently offered for deposits of similar remaining maturities.
Off-balance sheet items
Carrying value is a reasonable estimate of fair value. These
instruments are generally variable rate or short-term in nature,
with minimal fees charged.
The estimated fair values of the Savings Bank's financial
instruments were as follows at:
June 30, 1996
---------------------------------
Carrying Fair
Amount Value
-------------- ------------
Financial assets:
Cash and due from banks,
interest-bearing deposits
with banks and federal
funds sold $ 1,172,489 $ 1,172,489
Investment securities 899,687 900,635
Mortgage-backed securities 4,640,509 4,553,889
Loans receivable 23,266,664 23,191,000
Accrued interest receivable 150,165 150,165
Financial liabilities:
Deposit liabilities 26,950,784 27,001,000
Advances from Federal Home
Loan Bank $ 825,000 $ 667,000
Off balance sheet items - -
10. Capital Requirements:
The Corporation is subject to minimum regulatory capital requirements
promulgated by the Office of Thrift Supervision (OTS). The minimum
capital standards generally require the maintenance of regulatory capital
sufficient to meet each of three tests, hereinafter described as the
tangible capital requirement, the core capital requirement and the
risk-based capital requirement.
The tangible capital requirement provides for minimum tangible capital
(defined as stockholders' equity less all intangible assets) equal to
1.5% of adjusted total assets. The core capital requirement provides for
minimum core capital (tangible capital plus certain forms of supervisory
-18-
<PAGE>
goodwill and other qualifying intangible assets) equal to 3.0% of
adjusted total assets. The risk-based capital requirement currently
provides for the maintenance of core capital plus general loss allowances
equal to 8.0% of risk-weighted assets. In computing risk-weighted assets,
the Corporation multiplies the value of each asset on its statement of
financial condition by a defined risk-weighing factor, e.g., one- to
four- family residential loans carry a risk-weighting factor of 50%.
The Savings Bank's regulatory capital exceeds all minimum capital
requirements as shown in the following table:
<TABLE>
June 30, 1996
-------------------------------------------------
Regulatory Capital
Risk-
Tangible Core based
Capital % Capital % Capital %
-------- --- ------- --- ------- ---
(In Thousands)
<S> <C> <C> <C>
Capital under generally
accepted accounting
principles $2,792 $2,792 $2,792
General valuation
allowances - - 111
------ ------ ------
Regulatory capital computed 2,792 9.05 2,792 9.05 2,903 19.4
Minimum capital requirements 462 1.50 925 3.00 1,198 8.0
-------- ---- ------- ---- ------- ----
Regulatory capital-excess $2,330 7.55 $1,867 6.05 $1,705 11.4
====== ==== ====== ==== ====== ====
June 30, 1995
-------------------------------------------------
Regulatory Capital
Risk-
Tangible Core based
Capital % Capital % Capital %
-------- --- ------- --- ------- ---
(In Thousands)
Capital under generally
accepted accounting
principles $2,706 $2,706 $2,706
General valuation
allowances - - 70
-------- ------- --------
Regulatory capital computed 2,706 8.5 2,706 8.5 2,776 19.3
Minimum capital requirements 478 1.5 955 3.0 1,153 8.0
-------- --- ------- --- ------- ----
Regulatory capital-excess $2,228 7.0 $1,751 5.5 $1,623 11.3
====== === ====== === ====== ====
</TABLE>
11. Commitments:
At June 30, 1996, the Savings Bank had commitments to originate loans
totaling $1,026,900. The entire amount was for fixed-rate residential
loans. No portion of these loans were disbursed prior to June 30, 1996,
and the financial statements do not reflect any liability for such
commitments. Management anticipates that all originations will be funded
from existing liquidity and normal monthly cash flows. Loan commitments
as of June 30, 1995 were $411,000.
12. Retirement Plan:
The Corporation has a 401(K) Salary Savings Plan with the Ohio Savings
-19-
<PAGE>
and Loan League. During years ended June 30, 1996, 1995 and 1994,
respectively, retirement expense amounted to $12,700, $10,585 and
$10,167. The plan covers all employees having completed one year of
service and having attained the age of twenty-one. The employee can
contribute up to six percent with the employer matching contribution of
three percent and a discretionary three percent employer matching
contribution.
13. Federal Income Taxes:
The Corporation has qualified under provisions of the Internal Revenue
Code which permits the Savings Bank to deduct from taxable income an
allowance for bad debts based on a percentage of taxable income before
such deduction. The Tax Reform Act of 1969 gradually reduced this
reduction to 40% for years beginning in 1979. The Tax Reform Act of 1986
reduced this deduction to 8% beginning in 1988.
Appropriated and unappropriated retained income at June 30, 1996 included
earnings of approximately $653,000, representing such bad debt deductions
for which no provision for federal income taxes has been made. In the
future, if the Savings Bank does not meet the federal income tax
requirements necessary to permit it to deduct an allowance for bad debts,
the Savings Bank will be subject to federal income tax at the then
current corporate rate. Management does not contemplate any action which
would cause such cumulative bad debt deduction to be subject to federal
income taxes, although it is possible that changes in legislation could,
at a future date require recapture of all or part of this bad debt
deduction.
An analysis of income tax expense, setting forth the reasons for the
variations from the statutory rate is as follows:
<TABLE>
Year Ended June 30
----------------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Federal income taxes at the statutory
rate of 34% $38,519 $58,876 $93,028
Bad debt deduction - - (13,300)
Other, primarily surtax exemptions (11,677) (11,076) (1,365)
------- ------ ------
$26,842 $47,800 $78,363
======= ======= =======
23.7% 27.6% 28.6%
======= ======= =======
The tax effect of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities are as
follows:
June 30
----------------------------------------
1996 1995 1994
-------- -------- --------
Deferred tax assets arising from:
Loan loss reserve $ 26,800 $15,000 $13,300
Deferred loan fees and costs 11,100 15,500 19,700
Basis of investments 2,000 2,000 2,000
------- ------ ------
Total deferred tax assets 39,900 32,500 35,000
--------- ------ ------
Deferred tax liabilities arising from:
Accrual to cash conversion 32,300 30,300 19,500
Depreciation 20,200 20,800 21,700
FHLB stock 48,200 42,000 36,600
------- ------ ------
Total deferred tax liabilities (100,700) (93,100) (77,800)
------- ------ ------
Net deferred tax liability $ 60,800 $60,600 $42,800
=========== ======= =======
</TABLE>
-20-
<PAGE>
The Corporation has not recorded a valuation allowance, as the deferred
tax assets are presently considered to be realizable based on the level
of anticipated future taxable income. Net deferred tax liabilities and
federal income tax expense in future years can be significantly affected
by changes in enacted tax rates.
The components of deferred income tax expense (credit) are as follows:
Year Ended June 30
------------------------------------
1996 1995 1994
-------- -------- --------
Loan origination fees $ 4,400 $ 4,200 $ 5,500
FHLB stock dividend 6,200 5,400 3,900
Depreciation (600) (900) 200
Accrual to cash conversion 2,000 10,800 19,800
Bad debt reserves and other (11,800) (1,700) (13,300)
------ ------ ------
$ 200 $17,800 $ 16,100
========= ======= ========
14. Contingency - SAIF Recapitalization:
The deposits of savings associations such as the Savings Bank are
presently insured by the SAIF, which together with the BIF, are the two
insurance funds administered by the FDIC. On November 14, 1995, the FDIC
revised the premium schedule for BIF-insured banks to provide a range of
.00% to .27% (subject to a $2,000 minimum) of deposits (as compared to
the current range of .23% to .31% of deposits for SAIF-insured
institutions) due to the BIF achieving its statutory reserve ratio. As a
result, BIF members generally pay substantially lower premiums than the
SAIF members. It is anticipated that the SAIF will not be adequately
recapitalized until 2002, absent a substantial increase in premium rates
or the imposition of special assessments or other significant
developments, such as a merger of the SAIF and the BIF. As a result of
this disparity, SAIF members have been placed at a significant,
competitive disadvantage to BIF members due to higher costs for deposit
insurance. A recapitalization plan under consideration by the Treasury
Department, the FDIC, the OTS and the Congress reportedly provides for a
one-time assessment of .80% to .85% to be imposed on all deposits
assessed at the SAIF rates in order to recapitalize the SAIF and
eliminate the disparity, and an eventual merger of the SAIF and the BIF.
The Savings Bank currently is unable to predict the likelihood of
legislation effecting these changes, although a consensus appears to be
developing in this regard. If such an assessment was effected based on
deposits as of June 30, 1996, the Savings Bank's pro rata share would
amount to approximately $142,000 to $151,000 after taxes, respectively,
assuming a 34% tax rate.
15. Bad Debt Reserve Recapture:
A bill repealing the thrift bad debt reserve has been signed into law and
is effective for taxable years beginning after December 31, 1995. All
Savings Banks and Thrifts will be required to account for tax reserves
for bad debts in the same manner as banks. Such entities with assets less
than $500 million will be required to maintain a moving average expense -
based reserve and no longer will be able to calculate a reserve based on
a percentage of taxable income.
Tax reserves accumulated after 1987 will automatically be subject to
recapture. The recapture will occur in equal amounts over six years
beginning in 1997 and can be deferred up to two years, depending on the
level of loans originated.
As a result of the tax law change, the Corporation is expected to
ultimately recapture approximately $32,500 of tax reserves accumulated
after 1987, resulting in additional tax payments of $11,000. The
recapture of these reserves will not result in any significant income
statement effect to the Corporation. Pre-1988 tax reserves will not have
to be recaptured unless the Corporation or successor institution
liquidates, redeems shares or pays a dividend in excess of earnings and
profits.
-21-
16. Plan of Conversion:
On May 31, 1996, the Corporation's Board of Directors adopted a Plan of
Conversion (the "Plan") to convert the Savings Bank from a state
chartered mutual savings bank to a state chartered stock savings bank,
which will then become a wholly owned subsidiary of a holding company
formed in connection with the Conversion. The holding company will issue
common stock to be sold in the conversion and will use a portion of the
net proceeds thereof which it does not retain to purchase the capital
stock of the Savings Bank. The Plan is subject to approval by the
regulatory authorities and the members of the Corporation at a special
meeting.
At the time of conversion, the Corporation will establish a liquidation
account in an amount equal to its net worth as reflected in its latest
balance sheet used in its final conversion Prospectus. The liquidation
account will be maintained for the benefit of eligible deposit account
holders who continue to maintain their deposit accounts in the Savings
Bank after conversion. Only in the event of a complete liquidation will
each deposit account holder be entitled to receive a liquidation
distribution from the liquidation account in the amount of the then
current adjusted subaccount balance for deposit accounts then held before
any liquidation distribution may be made with respect to common stock.
Dividends paid by the Corporation subsequent to the conversion cannot be
paid from this liquidation account.
The Corporation may not declare or pay a cash dividend on or repurchase
any of its common stock if its net worth would thereby be reduced below
either the aggregate amount then required for the liquidation account or
the minimum regulatory capital requirements imposed by the federal and
state regulations.
Conversion costs of $47,261 have been incurred as of June 30, 1996. If
the conversion is ultimately successful, conversion costs will be
accounted for as a reduction of the stock proceeds. If the conversion is
unsuccessful, conversion costs will be charged to the Savings Bank's
operations. The Corporation expects to complete its conversion in the
first quarter of the fiscal year ended June 30, 1997.
-22-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FOUNDATION BANCORP, INC.
By: Laird L. Lazelle, Chief Executive
Officer (Duly Authorized Representative)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
Laird L. Lazelle Mardelle Dickhaut
President and Director Director
Date: September 4, 1996 Date: September 4, 1996
Ruth C. Emden Robert E. Levitch
Director Director
Date: September 4, 1996 Date: September 4, 1996
Michael S. Schwartz Paul L. Silverglade
Director Director
Date: September 4, 1996 Date: September 4, 1996
Ivan J. Silverman
Director
Date: September 4, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 61
<INT-BEARING-DEPOSITS> 1,111
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 5,540
<INVESTMENTS-MARKET> 5,455
<LOANS> 23,267
<ALLOWANCE> 44
<TOTAL-ASSETS> 30,835
<DEPOSITS> 26,951
<SHORT-TERM> 70
<LIABILITIES-OTHER> 267
<LONG-TERM> 754
0
0
<COMMON> 0
<OTHER-SE> 2,793
<TOTAL-LIABILITIES-AND-EQUITY> 30,835
<INTEREST-LOAN> 1,807
<INTEREST-INVEST> 373
<INTEREST-OTHER> 178
<INTEREST-TOTAL> 2,359
<INTEREST-DEPOSIT> 1,541
<INTEREST-EXPENSE> 1,592
<INTEREST-INCOME-NET> 767
<LOAN-LOSSES> 44
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 675
<INCOME-PRETAX> 113
<INCOME-PRE-EXTRAORDINARY> 86
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 7.55
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 98
<CHARGE-OFFS> 31
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 111
<ALLOWANCE-DOMESTIC> 111
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
